While relatively new, the diversification strategy has already
borne fruit. Over the past six years the country has seen an
average growth in real GDP of 7.7 percent, the best in Latin
America.

One key to this success has been a very concerted effort by the
government - through tax incentives, legal reforms, and
privatization efforts - to attract foreign investment. One big draw
has been the "free zones," business parks where foreign companies
manufacture goods for export without paying income tax, says Judith
Marcano, deputy chief of mission at the Dominican embassy in
Washington, D.C. Currently, the free zones host more than 500
companies, including multinationals such as Johnson & Johnson
and Corning. And the free zones have created about 250,000
jobs.

While most of these new jobs are relatively low-skill - such as
assembling textiles, footwear, and electronics for export -
Schroder says there's a new understanding in the country of the
connection between good education and higher-paying, high-tech
jobs. "While they are not quite there yet, I think that in 10 to 15
years, the Dominican Republic will give countries like Taiwan,
Singapore, and India a run for the money in terms of high-tech," he
says.

As important as foreign investment, which reached $1.2 billion in
2001, has been to the Dominican economy, homegrown efforts have
been equally vital. Perhaps the best example of this is Tricom, a
telecommunications company that was licensed to operate in 1992 and
has expanded ever since. "I think we were benefactors of the
terrific growth the Dominican Republic has had in terms of the
GDP," says Carl Carlson, chief operating officer. "Tourism and free
zones were multiplying the need for telecom. And the fact that
people had more disposable income meant there was a natural demand
for our services."